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    Navalny and Germany's NS 2 Dilemma (GGP)

Summary

If Germany were to halt Nord Stream 2 it would increase cohesion in EU and improve transatlantic relations.

by: Agata Loskot-Strachota

Posted in:

Complimentary, Global Gas Perspectives, Political, Infrastructure, Pipelines, News By Country, EU, Germany, Russia, United States

Navalny and Germany's NS 2 Dilemma (GGP)

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The attempted murder of Russian opposition leader and anti-corruption activist Alexei Navalny with a Soviet-era nerve agent Novichok has caused widespread outrage in Germany and was met with calls for appropriate joint response on EU and Nato level . The German doctors’ diagnosis was unequivocally condemned by Chancellor Angela Merkel, who said that she was expecting answers from the Russian side.

The occasion has given new urgency to the debate about German/EU sanctions on the Nord Stream 2 gas line, with calls to prevent its completion just when the finish-line is in sight.

Many of these calls come from within Germany itself: not only from the traditionally critical German experts and political parties such as the German Greens and the FDP, but also some CDU politicians, including the chairman of the Bundestag's foreign affairs committee, Norbert Rottgen.

Even the chairman of the SPD, Norbert Walter-Borjans, admitted that as part of the discussed sanction options related to the poisoning of Navalny, stopping NS2 construction is a possibility. However, the SPD still believes, as does also majority of the other coalition party CDU/CSU, that Germany needs NS2 and it should stand by the project. Merkel herself was also reluctant to consider sanctioning NS2, saying that the poisoning issue should not be linked with the gas pipeline issue, which she called a commercial venture.

Merkel's statement is in line with the current policy of Germany towards Russia, which has been trying to treat economic and political issues separately, and presented Nord Stream 2 itself as a financial investment by companies and so not a proper subject for federal government engagement.

Despite the annexation of Crimea and the instability in eastern Ukraine in 2014, Gazprom together with two German companies Uniper and Wintershall, Austrian OMV, French Engie and British-Dutch Shell started working on the project’s implementation the following year. Germany sees Russian gas as essential as transitional fuel for the energy transformation as both nuclear power and coal are phased out.

At the same time, Berlin claims that maintaining economic co-operation with Russia gives it a means to influence Moscow. Treating NS2 as a commercial venture, the German authorities resisted opening the project and its regulation to wider discussion at the European Union level. None of the other bones of contention -- the ongoing conflict in Ukraine, the Russian involvement in the war in Syria, the 2018 Novichok poisoning of Sergei Skripal and so on – has managed to halt it.

The ongoing controversies related to NS2 between EU member states and between Germany and the US have exposed German political support for the project, as evidenced by statements by Sigmar Gabriel and Heiko Maas related to the risk of US sanctions. It was the US sanctions that led to the suspension of the construction of NS2 in December 2019. Tightening them as the US Congress is considering could block work on completing the pipeline for longer.

Berlin, supported by a number of EU countries, has rejected and strongly opposed the sanctions, emphasising that extraterritorial sanctions are illegal under international law. US sanctions would hurt its European allies and also it is not acceptable that Washington should seek to influence European energy policy.

Berlin is unlikely to change course on NS 2 but if it wanted a reason to backtrack, then the case of Navalny is the perfect opportunity. The widespread indignation could lead Berlin to spearhead an EU response leading to the further suspension of construction, at least.

Germany would thereby not only send a clear signal to Russia, but also increase EU cohesion internally (which would be a significant achievement of the currently ongoing German presidency of the EU Council). It would improve its relations with the countries of central and eastern Europe, as well as give credibility to German and EU policy towards Ukraine and other countries.

What is more, it would neutralise (at least temporarily) one of the major points of contention between Germany and the US, undermining the rationale behind Washington's efforts to tighten NS 2-related sanctions, and pave the way for better transatlantic relations. Thus, symbolically, the EU under German leadership would reaffirm its full autonomy in shaping European energy matters and ease one of the key energy-related issues dividing both the EU internally and the EU from the US.

Washington and many European capitals would interpret Berlin's blocking of further construction work as an attempt to strengthen European unity. In addition, the halt of the completion of a large new gas pipeline from Russia during an oversupply of gas and available surpluses in import capacities (gas pipelines through Ukraine and Belarus, the Trans-Balkan and TurkStream pipelines, LNG terminals and so on) would give Germany and the EU time to calmly reflect on the role of gas in general, and Russian gas in particular during its energy transition and the implementation of the EU Green Deal.

Of course, German-led action to halt NS 2 work would also generate costs: first of all, it would involve the risk of losses for European companies that granted loans to Nord Stream 2 AG. European ports and subcontractors involved in the construction of the gas pipeline would also feel the pain. It would also undoubtedly result in the deterioration of not only Russian-German relations, but also EU-Russia relations.

Finally, there is an open question not only whether Germany would be willing to act to halt the construction of NS 2, but also what kind of actions the government in Berlin or the EU could take to actually stop it. After all, the project has all the necessary construction permits,and none has been issued directly by Berlin or Brussels. Arguably designing an EU-compliant measure, which would actually hit the pipeline could turn out to be as hard as causing Germany to change its mind about NS 2.